OTTAWA — Municipalities experiencing a cash crunch will be able to access their entire gas tax payment in one instalment, but the federal government says more consultation with the provinces is needed for further funding.
Prime Minister Justin Trudeau announced the expedited funding, which he said amounts to $2.2 billion, during prepared remarks on Monday.
“This is strong support to keep Canadians safe and communities strong, and it’s support that will give businesses the confidence to reopen, getting hard-working Canadians back on the job,” he said.
“This is a start. We know there is more to be done to support municipalities and to support the entire reopening process.”
The gas tax fund provides predictable long-term funding for more than 3,600 communities across the country, usually paid in two instalments: one in the spring and another in the fall, but this year municipalities will be able to access the entire 2020-21 payment later this month.
The government says providing the funding as one lump sum will help municipalities better plan for the year ahead and proceed with infrastructure projects to help restart the economy.
Trudeau said Monday that Catherine McKenna, minister of infrastructure and communities, has sent letters to all provincial and territorial counterparts to outline how this accelerated process will work.
The gas tax fund has a range of different project categories, such as capacity-building, sport infrastructure and roads, and can be used for projects such as high-speed broadband, improvements to water and road systems, and constructing cycling and walking paths. The Prime Minister’s Office (PMO) says municipalities can use the funds immediately for priority projects, bank the funds for later use, pool the money with other communities for shared infrastructure projects or use the funds to finance major infrastructure projects.
More consultation needed
The Federation of Canadian Municipalities (FCM) said in April that communities in Canada are facing a minimum of $10 billion to $15 billion in near-term, non-recoverable losses due to the COVID-19 pandemic, and asked for at least $10 billion in emergency operating funding — including at least $7.6 billion in direct federal allocations to all municipalities, plus $2.4 billion for those with transit systems.
The funding is needed to ensure consistent access to essential services provided by towns and cities, such as police, fire, paramedic services, and waste collection, the FCM said.
In a statement, FCM president and Halifax city councillor Bill Karsten said that while this “modest, preliminary measure” may help some municipalities with immediate liquidity issues, it is not new money.
“This money has already been accounted for in municipal budgets and does not address our crisis of non-recoverable losses, or the stark choices cities and communities now face,” Karsten said.
“The prime minister today confirmed his readiness to engage with municipalities on solutions. We are encouraged by his commitment to come forward with additional federal support, and we urge provincial governments to do the same.”
Trudeau told reporters Monday he knows the gas tax funding is insufficient, but insisted more help is on the way.
He said the federal government is working with the provinces to ensure municipalities have the funding they need, but future announcements will require co-operation with the provinces, which have jurisdiction over municipal funding.
Trudeau’s comments seemed to hint at trouble coming to a consensus with the provinces on how to help municipalities, but he would not elaborate on what the source of the delay in providing funds has been.
Trudeau did say provinces are facing different challenges due to the COVID-19 pandemic, and have differing ideas on federal intervention when it comes to municipalities.
“We respect the constitution that says it is to provinces to manage and fund municipalities, but at the same time we have looked for ways we can make direct contributions to municipalities, including through the gas tax transfer,” he said.
Trudeau said he recognizes that the federal government has more fiscal flexibility than the provinces to provide funding for municipalities, and that conversations with the provinces are ongoing and the federal government stands ready to help when a consensus is reached.
